UEM Sunrise’s billings, new launches hit by lockdowns


UEM Sunrise Bhd’s new launches for this year are expected to have gross development value lower than the initially RM1.2 billion planned, analysts estimated, although the company has maintained the target.

CGS-CIMB Securities Sdn Bhd analyst Ngo Siew Teng said in Australia, the full settlement of its Melbourne projects, which stands at A$41 million (RM124.87 million) pending settlement, could be delayed to financial year 2022 (FY22) as lockdown in Melbourne has been extended to Sept 2, 2021.

“In view of the lockdowns in place, we forecast slower-than-expected progressive billing progress, delays in new project launches and weak buyer sentiment.

“Hence, we now forecast UEM Sunrise to post a loss of RM9 million in FY21F (forecast) versus net profit of RM70 million previously,” Ngo wrote in a research report yesterday.

CGS-CIMB has cut UEM Sunrise’s FY22-23F earnings per share by 8% to 21% to reflect the higher finance cost and weaker associates or joint venture (JV) contributions.

The brokerage has revised down its target price for UEM Sunrise to 55 sen post-earnings revision, based on 0.4 times FY22F price-to-book value (P/BV) ratio, or -1 standard deviation of its 3-year mean P/BV.

“We are positive on UEM Sunrise due to its attractive valuation (circa 0.3 times FY22F P/BV versus peer average of 0.43 times) and anticipated earnings recovery in FY21-23F.

“We see limited downside as the stock has been trading at trough valuations of 0.3 times P/BV since 2010,” Ngo noted.

She expects the property developer’s core net loss of RM10 million for the first half of the year (1H21) was below its full-year estimates of RM70 million.

The analyst said UEM Sunrise’s bottomline was dragged down by lower-than-expected revenue due to the Full Movement Control Order (FMCO) and higher-than-expected finance costs.

Its 1H21 core net loss narrowed 84% year-on-year (YoY) to RM10 million, mainly driven by stronger revenue recognised, which increased by 63% YoY from local projects.

“Quarter-on-quarter, its second quarter of 2021 core net loss widened 19% YoY on the back of weaker sales and weaker contribution from JV/associates such as Radia Bukit Jelutong and Haute Property, dragged down by slower site progress due to the implementation of FMCO since June 2021,” she stated in the report.

Ngo added that the period under review saw stronger new property sales at RM707 million against RM151 million recorded in the previous year corresponding quarter, and amounted to 59% of the group’s sales targets of RM1.2 billion for the year.

Some RM56.6 million of new sales came from new launches, RM106.1 million from inventory monetisation and RM544.4 million from ongoing projects.

“We gather that UEM Sunrise has launched RM300 million worth of new projects in 1H21 and currently has a booking pipeline of RM207 million,” she said.

In addition, the group’s unbilled sales stood at RM2 billion as at end of June 2021, which is higher than RM1.7 billion as of the same time last year, due to stronger sales momentum.

UEM Sunrise shares closed unchanged at 37 sen yesterday, valuing the company RM1.85 billion.